Environmental policy and the UK’s review of the EU Balance of Competences

The UK Government’s Review of the Balance of Competences is aimed at developing an evidence base on what the EU does, what national governments do, and how it affects the UK. Although arguably a “marking time” exercise within UK politics, given fundamental differences between and within the coalition Government partners on European integration, its focus on providing an accessible evidence base across all policy areas has created an opportunity for stakeholders. Given that this evidence base could be used to inform possible UK Government ambitions to renegotiate the terms of its EU membership, it’s important to ensure accuracy, and a strong voice for environmental protection. IEEP has contributed responses on 6 of the 25 reviews launched so far (out of a total of 32 once the exercise is completed), selecting those which have most relevance for the environment. The remaining reviews planned by the UK have less environmental significance, so it’s time to take stock of what we’ve said.

CohesionWhile we note that the value added of EU cohesion funding is often debated, clear EU guidance enables new Member States which are developing their institutional capacity to avoid mistakes. Increasingly cohesion funding helps to target investment at transitions needed to enable a greener economy in future: energy and transport infrastructure are important examples. Investment in the UK has had real benefits in environmental terms; and the EU 15 member states also benefit indirectly from enhanced growth in new Member States, and directly in terms of higher exports.

Environment and climate change In the UK, as in many other Member States, environmental standards in most sectors would have been lower in the absence of EU legislation. In part, this is because of the need for cooperative responses to some environmental problems; but it is also true that making progress at a European level reduces impacts on competitiveness differentials, and creates a sizeable market for new technologies and products. This makes higher environmental standards more acceptable to national governments. The EU has greater scope than its constituent Member States to influence international negotiations and outcomes, particularly on climate change; while internally, shared decision-making enables the European economy to overcome some of the conflicts holding back progress at global level. There are some drawbacks to EU competence, however, notably the lack of clarity that can emerge from a legislative process heavy in checks and balances, and the relative slowness to amend legislation which has been found wanting. An increased focus on an evidence-based policy design process, and on improved implementation, is therefore to be welcomed. The assumption that non-regulatory approaches such as voluntary agreements are preferable is open to challenge – the voluntary agreement on CO2 emissions from passenger cars being an example where legislation provided earlier and more predictable progress, and greater clarity for business.

EnergyBenefits from the growing EU competence for energy have included the effect of infrastructure projects in holding down costs, and the impact of binding renewables targets in providing business with the necessary certainty, at a regional scale, to encourage investment. The technology neutral approach the UK favours would have been less effective in delivering the UK’s own climate objectives in a long-run cost-effective way. The UK has influenced EU energy market liberalisation in the spirit of its own model; although ironically, UK firms seem to have benefited less from opportunities in other Member States than some of their competitors. However, it has been harder to develop an appropriate EU policy on biofuels, with adequate sustainability safeguards, because of difficulties in modifying EU legislation once it has been adopted.

FisheriesThe fact that fish stocks are shared, and that transboundary cooperation is essential for sustainable management, makes it difficult to envisage a system based solely on Member States negotiating linked bilateral or multilateral deals. EU policy has been disappointing in its approach to sustainable fisheries; however there is little justification for the assumption that individual Member State decisions would have been more sustainable, and some reason to believe that competitive over-fishing might have been the alternative. Several strands of EU level decision-making and enforcement on technical conservation measures have paid insufficient attention to the specific characteristics of stocks and fisheries. The regionalised approach now adopted has significant potential to improve outcomes, and needs to be given time to work.

AgricultureAs with fisheries, agriculture policy at EU level has been developed sub-optimally; but again, as with fisheries, this does not mean that a national approach would be more sustainable in the UK. There is a clear single market rationale for avoiding competitive subsidy allocation among Member States; and the economic benefits of the EU negotiating as a single bloc in trade talks mean that agriculture subsidies need some over-arching EU control. Our evidence was written before the recent UK decision not to make the maximum transfer of funding from subsidy payments to rural development and agri-environment schemes. However, that decision reinforces points we made about how UK decisions, even if these were not constrained by the CAP, would be constrained by real or perceived competitiveness concerns caused by subsidy payments in other EU countries. Furthermore, subsidies made available throughout the EU are arguably considerably more decoupled, less generous, and more focused on environmental public goods, than they would be if the UK were taken out of the negotiating equation. We did, however, note that the UK was disadvantaged by the current skewed distribution of CAP expenditure; and that successive UK Governments have placed more emphasis on retaining the rebate than on correcting that skewed distribution.

BudgetOur evidence notes that an EU budget provides a potentially powerful additional tool for delivering shared goals, particularly on areas like climate change, where the availability of EU funding as a complementary mechanism to Member State action can help to overcome bottlenecks and address transboundary issues. Improvements are possible both in the ways in which EU funding can be used (including through risk-sharing instruments), and in the decision-making structure (where currently Member States privilege protecting their “share” of the budget over improving its effectiveness in delivering policy objectives).

ConclusionsWhile the individual reviews now being publicised provide a useful summary of the points made for and against the UK’s involvement in different areas of EU Policy, they don’t provide much of a clue yet on what UK Government priorities might be for renegotiation. This is partly, of course, because the current coalition has no agreed position on the matter. Looking at individual sections of the acquis separately as the Balance of Competences review does is also a weakness to the exercise. For all Member States, there are some individual policy areas where the constraints of EU membership are unwelcome. What matters is that the overall balance is positive; the scope for individual Member States to negotiate an à la carte approach has to be small. The counterfactual of where the UK might be in the event of a significantly reduced EU role is generally difficult to determine, although we have spelt out some of institutional issues in our evidence. There remains a risk of wishful thinking among UK politicians. In our view, the review so far gives a clear message that the balance of competence is very positive in terms of cost-effective delivery of environmental improvement in the UK. It will be important to ensure that those benefits, the economic benefits of the single market, and the business benefits of a predictable and transparent regulatory regime, are not put under threat if a new UK administration seeks a renegotiation.